HB 1937

CS

CHAMBER ACTION

1	The Commerce Council recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to property insurance; creating s.
7	489.1285, F.S.; specifying certain consumer protection
8	measures relating to roofing construction to be in effect
9	following certain executive orders; specifying certain
10	requirements to be complied with relating to roof repair
11	or reroofing; amending s. 627.062, F.S.; limiting an
12	insurer's recoupment of reimbursement premium; providing
13	limitations; amending s. 627.0628, F.S.; limiting use of
14	certain methodologies in determining hurricane loss
15	factors for reimbursement premium rates in certain rate
16	filings; creating s. 627.06281, F.S.; requiring certain
17	insurers and organizations to develop, maintain, and
18	update a public hurricane loss projection model; providing
19	reporting requirements for insurers; protecting trade
20	secret information; amending s. 627.0629, F.S.; tightening
21	a limitation on rate filings based on computer models
22	under certain circumstances; amending s. 627.351, F.S.;
23	providing additional legislative intent relating to the
24	Citizens Property Insurance Corporation; specifying a
25	limitation on dwelling limits for personal lines policies;
26	requiring the corporation to offer wind-only policies in
27	certain areas for new personal residential risks;
28	providing requirements and limitations; requiring creation
29	of a Market Accountability Advisory Committee to assist
30	the corporation for certain purposes; providing for
31	appointment of committee members; providing for terms;
32	requiring reports to the corporation; revising
33	requirements for the plan of operation of the corporation;
34	requiring a plan for removing personal lines policies from
35	coverage by the corporation which includes the development
36	and implementation of a take-out bonus strategy; deleting
37	limitations on certain personal lines residential wind-
38	only policies; deleting an obsolete reporting requirement;
39	specifying nonapplication of certain policy requirements
40	in counties lacking reasonable degrees of competition for
41	certain policies under certain circumstances; requiring
42	the commission to adopt rules; deleting an obsolete rate
43	methodology panel reporting requirement provision;
44	requiring the corporation to require the securing of flood
45	insurance as a condition of coverage under certain
46	circumstances; providing requirements and limitations;
47	amending s. 627.411, F.S.; revising grounds for office
48	disapproval of certain forms; amending s. 627.7015, F.S.;
49	revising purpose and scope provisions relating to an
50	alternative procedure for resolution of disputed property
51	insurance claims; providing an additional criterion for
52	excusing an insured from being required to submit to
53	certain loss appraisal processes; amending s. 627.702,
54	F.S.; specifying intent; providing nonapplication of
55	certain insurer liability requirements under certain
56	circumstances; limiting an insurer's liability to certain
57	loss covered by a covered peril; amending s. 627.706,
58	F.S.; revising definitions relating to sinkholes;
59	providing additional definitions; creating s. 627.7065,
60	F.S.; providing legislative findings; requiring the
61	Department of Financial Services and the Office of the
62	Insurance Consumer Advocate to consult with the Florida
63	Geological Survey and the Department of Environmental
64	Protection to implement a statewide automated database of
65	sinkholes and related activity; providing requirements for
66	the form and content of the database; authorizing the
67	Department of Financial Services to require insurers to
68	provide certain information; providing for management of
69	the database; requiring the department to investigate
70	sinkhole activity reports and include findings and
71	investigations in the database; requiring the Department
72	of Environmental Protection to report on the database to
73	the Governor, Legislature, and Chief Financial Officer;
74	authorizing the Department of Financial Services to adopt
75	implementing rules; amending s. 627.707, F.S.; revising
76	standards for investigations of sinkhole claims by
77	insurers; requiring an insurer to engage an engineer and
78	professional geologist for certain purposes; requiring a
79	report under certain circumstances; requiring an insurer
80	to provide written notice to a policyholder disclosing
81	certain information; authorizing an insurer to deny a
82	claim under certain circumstances; authorizing a
83	policyholder to demand certain testing; providing
84	requirements; specifying required activities for insurers
85	if a sinkhole loss is verified; specifying payment
86	requirements for insurers; providing limitations;
87	requiring the insurer to pay fees of the engineer and
88	geologist; authorizing an insurer to engage a structural
89	engineer for certain purposes; creating s. 627.7072, F.S.;
90	specifying requirements for sinkhole testing by engineers
91	and geologists; creating s. 627.7073, F.S.; providing
92	reporting requirements for engineers and geologists after
93	testing for sinkholes; specifying a presumption of
94	correctness of certain findings; requiring an insurer
95	paying a sinkhole loss claim to file a report and
96	certification with the county property appraiser;
97	requiring the property appraiser to record the report and
98	certification; requiring the insurer to bear the cost of
99	filing and recording; requiring a seller of certain
100	property to make certain disclosures to property buyers
101	under certain circumstances; requiring the Auditor General
102	to perform an operational audit of the Citizens Property
103	Insurance Corporation; specifying audit requirements;
104	requiring a report; requiring the board of governors of
105	the Citizens Property Insurance Corporation to submit a
106	report to the Legislature relating to property and
107	casualty insurance; specifying report requirements;
108	providing for contingent effect; providing effective
109	dates.
110
111	Be It Enacted by the Legislature of the State of Florida:
112
113	Section 1.  Section 489.1285, Florida Statutes, is created
114	to read:
115	489.1285  Consumer protections; contract limitations.--
116	Subsequent to the issuance of an executive order by the Office
117	of the Governor declaring the existence of a state of emergency
118	as a result and consequence of a serious threat posed to the
119	public health, safety, and property in this state, in which
120	damage to property has occurred and for which property insurance
121	claims have been filed, the following consumer protection
122	measures shall be in effect:
123	(1)  A contract for the repair or reroofing of a
124	residential structure that has been agreed to in writing by the
125	parties to the contract shall be a valid and binding agreement.
126	A roofing contractor licensed pursuant to this chapter who is a
127	party to a contract for the repair or reroofing of a residential
128	structure shall be bound by the qualifications for licensure and
129	the job scope specified in this chapter for a roofing contractor
130	to provide timely and professional services.
131	(2)  If a contract is agreed to for the repair of a roof or
132	reroofing of a residential structure, which repair is necessary
133	as a result of damage caused by an emergency situation
134	designated by executive order, the damages must be confirmed by
135	a third party who is independent from the parties to the
136	contract that the damages are a direct result of a designated
137	emergency situation. Third-party confirmation must be attested
138	to by an insurance adjuster, emergency management personnel,
139	local building official, or other similar authority.
140	(3)(a)  A contract for services shall not be valid after 60
141	calendar days after the date the contract agreement was signed
142	by the parties to the contract. The contract may not provide for
143	an automatic extension of time for the provisions of the
144	contract. After the 60 days have expired, the contract shall be
145	null and void by operation of law.
146	(b)  Within 10 calendar days after the period of time for
147	expiration of the contract, the parties to the contract may
148	agree in writing, as a separate contract to the original
149	contract, to an additional period of 60 calendar days beyond the
150	time period specified in the original contract to complete the
151	roofing services. If the performance of services under the
152	contract by the roofing contractor have not been completed, the
153	contract shall be null and void with no further responsibilities
154	or duties on the part of the parties to the contract except as
155	provided in this paragraph and subsection (4).
156	(c)  The subsequent contract may be extended beyond the
157	additional 60 days pursuant to a written agreement between the
158	parties and signed as an addendum or supplement to the contract.
159	The delay or extension of services may only be agreed to if the
160	delay in providing the contractual services is due to the
161	unavailability, beyond the control of the roofing contractor, of
162	roofing materials necessary for the completion of the repair or
163	reroofing of the residence. The contracted price of the services
164	may not be changed from the agreed to cost specified in the
165	subsequent contract.
166	(4)  Subsequent to the expiration of the contract or
167	contracts specified in subsection (3), the contractor shall
168	refund and pay in full, upon demand, any and all remuneration
169	received in the form of a prepayment, up-front fee, deposit, or
170	other consideration already paid to the contractor.
171	(5)  The provisions of this section apply to registered, as
172	well as certified, roofing contractors.
173	Section 2.  Subsection (5) of section 627.062, Florida
174	Statutes, is amended to read:
175	627.062  Rate standards.--
176	(5)  With respect to a rate filing involving coverage of
177	the type for which the insurer is required to pay a
178	reimbursement premium to the Florida Hurricane Catastrophe Fund,
179	the insurer may fully recoup in its property insurance premiums
180	any reimbursement premiums paid to the Florida Hurricane
181	Catastrophe Fund, together with reasonable costs of other
182	reinsurance, but may not recoup reinsurance costs that duplicate
183	coverage provided by the Florida Hurricane Catastrophe Fund. An
184	insurer may not recoup more than one year of reimbursement
185	premium at a time. Any under-recoupment from the prior year may
186	be added to the following year's reimbursement premium and any
187	over-recoupment shall be subtracted from the following year's
188	reimbursement premium.
189	Section 3.  Paragraph (c) of subsection (1) and paragraph
190	(c) of subsection (3) of section 627.0628, Florida Statutes, are
191	amended to read:
192	627.0628  Florida Commission on Hurricane Loss Projection
193	Methodology.--
194	(1)  LEGISLATIVE FINDINGS AND INTENT.--
195	(c)  It is the intent of the Legislature to create the
196	Florida Commission on Hurricane Loss Projection Methodology as a
197	panel of experts to provide the most actuarially sophisticated
198	guidelines and standards for projection of hurricane losses
199	possible, given the current state of actuarial science. It is
200	the further intent of the Legislature that such standards and
201	guidelines must be used by the State Board of Administration in
202	developing reimbursement premium rates for the Florida Hurricane
203	Catastrophe Fund, and, subject to paragraph (3)(c), may be used
204	by insurers in rate filings under s. 627.062 unless the way in
205	which such standards and guidelines were applied by the insurer
206	was erroneous, as shown by a preponderance of the evidence.
207	(3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
208	(c)  With respect to a rate filing under s. 627.062, an
209	insurer may employ actuarial methods, principles, standards,
210	models, or output ranges found by the commission to be accurate
211	or reliable to determine hurricane loss factors for use in a
212	rate filing under s. 627.062. Such, which findings and factors
213	are admissible and relevant in consideration of a rate filing by
214	the office or in any arbitration or administrative or judicial
215	review only if the office and the consumer advocate appointed
216	pursuant to s. 627.0613 have access to all of the assumptions
217	and factors that were used in developing the actuarial methods,
218	principles, standards, models, or output ranges and are not
219	precluded from disclosing such information in a rate proceeding.
220	Section 4.  Section 627.06281, Florida Statutes, is created
221	to read:
222	627.06281  Public hurricane loss projection model;
223	reporting of data by insurers.--Within 30 days after a written
224	request for loss data and associated exposure data by the office
225	or a type I center within the State University System
226	established to study mitigation, residential property insurers
227	and licensed rating and advisory organizations that compile
228	residential property insurance loss data shall provide loss data
229	and associated exposure data for residential property insurance
230	policies to the office or to a type I center within the State
231	University System established to study mitigation, as directed
232	by the office, for the purposes of developing, maintaining, and
233	updating a public model for hurricane loss projections. The loss
234	data and associated exposure data provided shall be in writing.
235	Any loss data and associated exposure data provided pursuant to
236	this section that constitutes a trade secret as defined in s.
237	812.081, and as provided in s. 815.04(3), shall be subject to
238	the provisions of s. 815.045.
239	Section 5.  Subsection (7) of section 627.0629, Florida
240	Statutes, is amended to read:
241	627.0629  Residential property insurance; rate filings.--
242	(7)  Any rate filing that is based in whole or part on data
243	from a computer model may not exceed 15 25 percent unless there
244	is a public hearing.
245	Section 6.  Paragraphs (a), (c), (d), and (q) of subsection
246	(6) of section 627.351, Florida Statutes, are amended to read:
247	627.351  Insurance risk apportionment plans.--
248	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
249	(a)1.  The Legislature finds that actual and threatened
250	catastrophic losses to property in this state from hurricanes
251	have caused insurers to be unwilling or unable to provide
252	property insurance coverage to the extent sought and needed. It
253	is in the public interest and a public purpose to assist in
254	assuring that property in the state is insured so as to
255	facilitate the remediation, reconstruction, and replacement of
256	damaged or destroyed property in order to reduce or avoid the
257	negative effects otherwise resulting to the public health,
258	safety, and welfare; to the economy of the state; and to the
259	revenues of the state and local governments needed to provide
260	for the public welfare. It is necessary, therefore, to provide
261	property insurance to applicants who are in good faith entitled
262	to procure insurance through the voluntary market but are unable
263	to do so. The Legislature intends by this subsection that
264	property insurance be provided and that it continues, as long as
265	necessary, through an entity organized to achieve efficiencies
266	and economies, while providing service to policyholders,
267	applicants, and agents that is no less than the quality
268	generally provided in the voluntary market, all toward the
269	achievement of the foregoing public purposes. Because it is
270	essential for the corporation to have the maximum financial
271	resources to pay claims following a catastrophic hurricane, it
272	is the intent of the Legislature that the income of the
273	corporation be exempt from federal income taxation and that
274	interest on the debt obligations issued by the corporation be
275	exempt from federal income taxation.
276	2.  The Residential Property and Casualty Joint
277	Underwriting Association originally created by this statute
278	shall be known, as of July 1, 2002, as the Citizens Property
279	Insurance Corporation. The corporation shall provide insurance
280	for residential and commercial property, for applicants who are
281	in good faith entitled, but are unable, to procure insurance
282	through the voluntary market. The corporation shall operate
283	pursuant to a plan of operation approved by order of the office.
284	The plan is subject to continuous review by the office. The
285	office may, by order, withdraw approval of all or part of a plan
286	if the office determines that conditions have changed since
287	approval was granted and that the purposes of the plan require
288	changes in the plan. For the purposes of this subsection,
289	residential coverage includes both personal lines residential
290	coverage, which consists of the type of coverage provided by
291	homeowner's, mobile home owner's, dwelling, tenant's,
292	condominium unit owner's, and similar policies, and commercial
293	lines residential coverage, which consists of the type of
294	coverage provided by condominium association, apartment
295	building, and similar policies.
296	3.  It is the intent of the Legislature that policyholders,
297	applicants, and agents of the corporation receive service and
298	treatment of the highest possible level but never less than that
299	generally provided in the voluntary market. It also is intended
300	that the corporation be held to service standards no less than
301	those applied to insurers in the voluntary market by the office
302	with respect to responsiveness, timeliness, customer courtesy,
303	and overall dealings with policyholders, applicants, or agents
304	of the corporation.
305	(c)  The plan of operation of the corporation:
306	1.  Must provide for adoption of residential property and
307	casualty insurance policy forms and commercial residential and
308	nonresidential property insurance forms, which forms must be
309	approved by the office prior to use. The corporation shall adopt
310	the following policy forms:
311	a.  Standard personal lines policy forms that are
312	comprehensive multiperil policies providing full coverage of a
313	residential property equivalent to the coverage provided in the
314	private insurance market under an HO-3, HO-4, or HO-6 policy.
315	b.  Basic personal lines policy forms that are policies
316	similar to an HO-8 policy or a dwelling fire policy that provide
317	coverage meeting the requirements of the secondary mortgage
318	market, but which coverage is more limited than the coverage
319	under a standard policy.
320	c.  Commercial lines residential policy forms that are
321	generally similar to the basic perils of full coverage
322	obtainable for commercial residential structures in the admitted
323	voluntary market.
324	d.  Personal lines and commercial lines residential
325	property insurance forms that cover the peril of wind only. The
326	forms are applicable only to residential properties located in
327	areas eligible for coverage under the high-risk account referred
328	to in sub-subparagraph (b)2.a.
329	e.  Commercial lines nonresidential property insurance
330	forms that cover the peril of wind only. The forms are
331	applicable only to nonresidential properties located in areas
332	eligible for coverage under the high-risk account referred to in
333	sub-subparagraph (b)2.a.
334
335	The dwelling limits for any personal lines policy in both the
336	personal lines account and the high-risk account may not exceed
337	$1 million. For new personal residential risks written by the
338	corporation on or after May 7, 2005, in areas eligible for
339	coverage in the high-risk account, the corporation shall offer,
340	subject to reasonable underwriting guidelines, a wind only
341	policy with building coverage valued at up to $1 million. For
342	such new personal residential risks covering properties valued
343	at more than $1 million, the corporation shall offer a wind-only
344	policy of up to $1 million of building coverage without any
345	penalty or reduction in coverage for underinsurance or the
346	purchase of other insurance, provided the insured property owner
347	maintains insurance coverage for the value of the building in
348	excess of $1 million. Coverage for property other than the
349	building and any attached structures shall be offered by the
350	corporation in addition to the $1 million limit of building
351	coverage. For all existing high-risk account policies in effect
352	on May 7, 2005, the corporation shall continue to offer coverage
353	for the full value of the building and property without
354	limitation.
355	2.a.  Must provide that the corporation adopt a program in
356	which the corporation and authorized insurers enter into quota
357	share primary insurance agreements for hurricane coverage, as
358	defined in s. 627.4025(2)(a), for eligible risks, and adopt
359	property insurance forms for eligible risks which cover the
360	peril of wind only. As used in this subsection, the term:
361	(I)  "Quota share primary insurance" means an arrangement
362	in which the primary hurricane coverage of an eligible risk is
363	provided in specified percentages by the corporation and an
364	authorized insurer. The corporation and authorized insurer are
365	each solely responsible for a specified percentage of hurricane
366	coverage of an eligible risk as set forth in a quota share
367	primary insurance agreement between the corporation and an
368	authorized insurer and the insurance contract. The
369	responsibility of the corporation or authorized insurer to pay
370	its specified percentage of hurricane losses of an eligible
371	risk, as set forth in the quota share primary insurance
372	agreement, may not be altered by the inability of the other
373	party to the agreement to pay its specified percentage of
374	hurricane losses. Eligible risks that are provided hurricane
375	coverage through a quota share primary insurance arrangement
376	must be provided policy forms that set forth the obligations of
377	the corporation and authorized insurer under the arrangement,
378	clearly specify the percentages of quota share primary insurance
379	provided by the corporation and authorized insurer, and
380	conspicuously and clearly state that neither the authorized
381	insurer nor the corporation may be held responsible beyond its
382	specified percentage of coverage of hurricane losses.
383	(II)  "Eligible risks" means personal lines residential and
384	commercial lines residential risks that meet the underwriting
385	criteria of the corporation and are located in areas that were
386	eligible for coverage by the Florida Windstorm Underwriting
387	Association on January 1, 2002.
388	b.  The corporation may enter into quota share primary
389	insurance agreements with authorized insurers at corporation
390	coverage levels of 90 percent and 50 percent.
391	c.  If the corporation determines that additional coverage
392	levels are necessary to maximize participation in quota share
393	primary insurance agreements by authorized insurers, the
394	corporation may establish additional coverage levels. However,
395	the corporation's quota share primary insurance coverage level
396	may not exceed 90 percent.
397	d.  Any quota share primary insurance agreement entered
398	into between an authorized insurer and the corporation must
399	provide for a uniform specified percentage of coverage of
400	hurricane losses, by county or territory as set forth by the
401	corporation board, for all eligible risks of the authorized
402	insurer covered under the quota share primary insurance
403	agreement.
404	e.  Any quota share primary insurance agreement entered
405	into between an authorized insurer and the corporation is
406	subject to review and approval by the office. However, such
407	agreement shall be authorized only as to insurance contracts
408	entered into between an authorized insurer and an insured who is
409	already insured by the corporation for wind coverage.
410	f.  For all eligible risks covered under quota share
411	primary insurance agreements, the exposure and coverage levels
412	for both the corporation and authorized insurers shall be
413	reported by the corporation to the Florida Hurricane Catastrophe
414	Fund. For all policies of eligible risks covered under quota
415	share primary insurance agreements, the corporation and the
416	authorized insurer shall maintain complete and accurate records
417	for the purpose of exposure and loss reimbursement audits as
418	required by Florida Hurricane Catastrophe Fund rules. The
419	corporation and the authorized insurer shall each maintain
420	duplicate copies of policy declaration pages and supporting
421	claims documents.
422	g.  The corporation board shall establish in its plan of
423	operation standards for quota share agreements which ensure that
424	there is no discriminatory application among insurers as to the
425	terms of quota share agreements, pricing of quota share
426	agreements, incentive provisions if any, and consideration paid
427	for servicing policies or adjusting claims.
428	h.  The quota share primary insurance agreement between the
429	corporation and an authorized insurer must set forth the
430	specific terms under which coverage is provided, including, but
431	not limited to, the sale and servicing of policies issued under
432	the agreement by the insurance agent of the authorized insurer
433	producing the business, the reporting of information concerning
434	eligible risks, the payment of premium to the corporation, and
435	arrangements for the adjustment and payment of hurricane claims
436	incurred on eligible risks by the claims adjuster and personnel
437	of the authorized insurer. Entering into a quota sharing
438	insurance agreement between the corporation and an authorized
439	insurer shall be voluntary and at the discretion of the
440	authorized insurer.
441	3.  May provide that the corporation may employ or
442	otherwise contract with individuals or other entities to provide
443	administrative or professional services that may be appropriate
444	to effectuate the plan. The corporation shall have the power to
445	borrow funds, by issuing bonds or by incurring other
446	indebtedness, and shall have other powers reasonably necessary
447	to effectuate the requirements of this subsection. The
448	corporation may, but is not required to, seek judicial
449	validation of its bonds or other indebtedness under chapter 75.
450	The corporation may issue bonds or incur other indebtedness, or
451	have bonds issued on its behalf by a unit of local government
452	pursuant to subparagraph (g)2., in the absence of a hurricane or
453	other weather-related event, upon a determination by the
454	corporation, subject to approval by the office, that such action
455	would enable it to efficiently meet the financial obligations of
456	the corporation and that such financings are reasonably
457	necessary to effectuate the requirements of this subsection. The
458	corporation is authorized to take all actions needed to
459	facilitate tax-free status for any such bonds or indebtedness,
460	including formation of trusts or other affiliated entities. The
461	corporation shall have the authority to pledge assessments,
462	projected recoveries from the Florida Hurricane Catastrophe
463	Fund, other reinsurance recoverables, market equalization and
464	other surcharges, and other funds available to the corporation
465	as security for bonds or other indebtedness. In recognition of
466	s. 10, Art. I of the State Constitution, prohibiting the
467	impairment of obligations of contracts, it is the intent of the
468	Legislature that no action be taken whose purpose is to impair
469	any bond indenture or financing agreement or any revenue source
470	committed by contract to such bond or other indebtedness.
471	4.a.  Must require that the corporation operate subject to
472	the supervision and approval of a board of governors consisting
473	of 7 individuals who are residents of this state, from different
474	geographical areas of this state, appointed by the Chief
475	Financial Officer. The Chief Financial Officer shall designate
476	one of the appointees as chair. All board members serve at the
477	pleasure of the Chief Financial Officer. All board members,
478	including the chair, must be appointed to serve for 3-year terms
479	beginning annually on a date designated by the plan. Any board
480	vacancy shall be filled for the unexpired term by the Chief
481	Financial Officer. The Chief Financial Officer shall appoint a
482	technical advisory group to provide information and advice to
483	the board of governors in connection with the board's duties
484	under this subsection. The executive director and senior
485	managers of the corporation shall be engaged by the Chief
486	Financial Officer and serve at the pleasure of the Chief
487	Financial Officer. The executive director is responsible for
488	employing other staff as the corporation may require, subject to
489	review and concurrence by the office of the Chief Financial
490	Officer.
491	b.  The board shall create a Market Accountability Advisory
492	Committee to assist the corporation in developing awareness of
493	its rates and its customer and agent service levels in
494	relationship to the voluntary market insurers writing similar
495	coverage. The members of the advisory committee shall consist of
496	the following 11 persons, one of whom must be elected chair by
497	the members of the committee: four representatives, one
498	appointed by the Florida Association of Insurance Agents, one by
499	the Florida Association of Insurance and Financial Advisors, one
500	by the Professional Insurance Agents of Florida, and one by the
501	Latin American Association of Insurance Agencies; three
502	representatives appointed by the insurers with the three highest
503	voluntary market share of residential property insurance
504	business in the state; one representative from the Office of
505	Insurance Regulation; one consumer appointed by the board who is
506	insured by the corporation at the time of appointment to the
507	committee; one representative appointed by the Florida
508	Association of Realtors; and one representative appointed by the
509	Florida Bankers Association. All members must serve for 3-year
510	terms and may serve for consecutive terms. The committee shall
511	report to the corporation at each board meeting on insurance
512	market issues which may include rates and rate competition with
513	the voluntary market; service, including policy issuance, claims
514	processing, and general responsiveness to policyholders,
515	applicants, and agents; and matters relating to depopulation.
516	5.  Must provide a procedure for determining the
517	eligibility of a risk for coverage, as follows:
518	a.  Subject to the provisions of s. 627.3517, with respect
519	to personal lines residential risks, if the risk is offered
520	coverage from an authorized insurer at the insurer's approved
521	rate under either a standard policy including wind coverage or,
522	if consistent with the insurer's underwriting rules as filed
523	with the office, a basic policy including wind coverage, the
524	risk is not eligible for any policy issued by the corporation.
525	If the risk is not able to obtain any such offer, the risk is
526	eligible for either a standard policy including wind coverage or
527	a basic policy including wind coverage issued by the
528	corporation; however, if the risk could not be insured under a
529	standard policy including wind coverage regardless of market
530	conditions, the risk shall be eligible for a basic policy
531	including wind coverage unless rejected under subparagraph 8.
532	The corporation shall determine the type of policy to be
533	provided on the basis of objective standards specified in the
534	underwriting manual and based on generally accepted underwriting
535	practices.
536	(I)  If the risk accepts an offer of coverage through the
537	market assistance plan or an offer of coverage through a
538	mechanism established by the corporation before a policy is
539	issued to the risk by the corporation or during the first 30
540	days of coverage by the corporation, and the producing agent who
541	submitted the application to the plan or to the corporation is
542	not currently appointed by the insurer, the insurer shall:
543	(A)  Pay to the producing agent of record of the policy,
544	for the first year, an amount that is the greater of the
545	insurer's usual and customary commission for the type of policy
546	written or a fee equal to the usual and customary commission of
547	the corporation; or
548	(B)  Offer to allow the producing agent of record of the
549	policy to continue servicing the policy for a period of not less
550	than 1 year and offer to pay the agent the greater of the
551	insurer's or the corporation's usual and customary commission
552	for the type of policy written.
553
554	If the producing agent is unwilling or unable to accept
555	appointment, the new insurer shall pay the agent in accordance
556	with sub-sub-sub-subparagraph (A).
557	(II)  When the corporation enters into a contractual
558	agreement for a take-out plan, the producing agent of record of
559	the corporation policy is entitled to retain any unearned
560	commission on the policy, and the insurer shall:
561	(A)  Pay to the producing agent of record of the
562	corporation policy, for the first year, an amount that is the
563	greater of the insurer's usual and customary commission for the
564	type of policy written or a fee equal to the usual and customary
565	commission of the corporation; or
566	(B)  Offer to allow the producing agent of record of the
567	corporation policy to continue servicing the policy for a period
568	of not less than 1 year and offer to pay the agent the greater
569	of the insurer's or the corporation's usual and customary
570	commission for the type of policy written.
571
572	If the producing agent is unwilling or unable to accept
573	appointment, the new insurer shall pay the agent in accordance
574	with sub-sub-sub-subparagraph (A).
575	b.  With respect to commercial lines residential risks, if
576	the risk is offered coverage under a policy including wind
577	coverage from an authorized insurer at its approved rate, the
578	risk is not eligible for any policy issued by the corporation.
579	If the risk is not able to obtain any such offer, the risk is
580	eligible for a policy including wind coverage issued by the
581	corporation.
582	(I)  If the risk accepts an offer of coverage through the
583	market assistance plan or an offer of coverage through a
584	mechanism established by the corporation before a policy is
585	issued to the risk by the corporation or during the first 30
586	days of coverage by the corporation, and the producing agent who
587	submitted the application to the plan or the corporation is not
588	currently appointed by the insurer, the insurer shall:
589	(A)  Pay to the producing agent of record of the policy,
590	for the first year, an amount that is the greater of the
591	insurer's usual and customary commission for the type of policy
592	written or a fee equal to the usual and customary commission of
593	the corporation; or
594	(B)  Offer to allow the producing agent of record of the
595	policy to continue servicing the policy for a period of not less
596	than 1 year and offer to pay the agent the greater of the
597	insurer's or the corporation's usual and customary commission
598	for the type of policy written.
599
600	If the producing agent is unwilling or unable to accept
601	appointment, the new insurer shall pay the agent in accordance
602	with sub-sub-sub-subparagraph (A).
603	(II)  When the corporation enters into a contractual
604	agreement for a take-out plan, the producing agent of record of
605	the corporation policy is entitled to retain any unearned
606	commission on the policy, and the insurer shall:
607	(A)  Pay to the producing agent of record of the
608	corporation policy, for the first year, an amount that is the
609	greater of the insurer's usual and customary commission for the
610	type of policy written or a fee equal to the usual and customary
611	commission of the corporation; or
612	(B)  Offer to allow the producing agent of record of the
613	corporation policy to continue servicing the policy for a period
614	of not less than 1 year and offer to pay the agent the greater
615	of the insurer's or the corporation's usual and customary
616	commission for the type of policy written.
617
618	If the producing agent is unwilling or unable to accept
619	appointment, the new insurer shall pay the agent in accordance
620	with sub-sub-sub-subparagraph (A).
621	6.  Must include rules for classifications of risks and
622	rates therefor.
623	7.  Must provide that if premium and investment income for
624	an account attributable to a particular calendar year are in
625	excess of projected losses and expenses for the account
626	attributable to that year, such excess shall be held in surplus
627	in the account. Such surplus shall be available to defray
628	deficits in that account as to future years and shall be used
629	for that purpose prior to assessing assessable insurers and
630	assessable insureds as to any calendar year.
631	8.  Must provide objective criteria and procedures to be
632	uniformly applied for all applicants in determining whether an
633	individual risk is so hazardous as to be uninsurable. In making
634	this determination and in establishing the criteria and
635	procedures, the following shall be considered:
636	a.  Whether the likelihood of a loss for the individual
637	risk is substantially higher than for other risks of the same
638	class; and
639	b.  Whether the uncertainty associated with the individual
640	risk is such that an appropriate premium cannot be determined.
641
642	The acceptance or rejection of a risk by the corporation shall
643	be construed as the private placement of insurance, and the
644	provisions of chapter 120 shall not apply.
645	9.  Must provide that the corporation shall make its best
646	efforts to procure catastrophe reinsurance at reasonable rates,
647	to cover its projected 100-year probable maximum loss as
648	determined by the board of governors.
649	10.  Must provide that in the event of regular deficit
650	assessments under sub-subparagraph (b)3.a. or sub-subparagraph
651	(b)3.b., in the personal lines account, the commercial lines
652	residential account, or the high-risk account, the corporation
653	shall levy upon corporation policyholders in its next rate
654	filing, or by a separate rate filing solely for this purpose, a
655	market equalization surcharge arising from a regular assessment
656	in such account in a percentage equal to the total amount of
657	such regular assessments divided by the aggregate statewide
658	direct written premium for subject lines of business for the
659	prior calendar year. Market equalization surcharges under this
660	subparagraph are not considered premium and are not subject to
661	commissions, fees, or premium taxes; however, failure to pay a
662	market equalization surcharge shall be treated as failure to pay
663	premium.
664	11.  The policies issued by the corporation must provide
665	that, if the corporation or the market assistance plan obtains
666	an offer from an authorized insurer to cover the risk at its
667	approved rates, the risk is no longer eligible for renewal
668	through the corporation.
669	12.  Corporation policies and applications must include a
670	notice that the corporation policy could, under this section, be
671	replaced with a policy issued by an authorized insurer that does
672	not provide coverage identical to the coverage provided by the
673	corporation. The notice shall also specify that acceptance of
674	corporation coverage creates a conclusive presumption that the
675	applicant or policyholder is aware of this potential.
676	13.  May establish, subject to approval by the office,
677	different eligibility requirements and operational procedures
678	for any line or type of coverage for any specified county or
679	area if the board determines that such changes to the
680	eligibility requirements and operational procedures are
681	justified due to the voluntary market being sufficiently stable
682	and competitive in such area or for such line or type of
683	coverage and that consumers who, in good faith, are unable to
684	obtain insurance through the voluntary market through ordinary
685	methods would continue to have access to coverage from the
686	corporation. When coverage is sought in connection with a real
687	property transfer, such requirements and procedures shall not
688	provide for an effective date of coverage later than the date of
689	the closing of the transfer as established by the transferor,
690	the transferee, and, if applicable, the lender.
691	14.  Must provide that, with respect to the high-risk
692	account, any assessable insurer with a surplus as to
693	policyholders of $25 million or less writing 25 percent or more
694	of its total countrywide property insurance premiums in this
695	state may petition the office, within the first 90 days of each
696	calendar year, to qualify as a limited apportionment company. In
697	no event shall a limited apportionment company be required to
698	participate in the portion of any assessment, within the high-
699	risk account, pursuant to sub-subparagraph (b)3.a. or sub-
700	subparagraph (b)3.b. in the aggregate which exceeds $50 million
701	after payment of available high-risk account funds in any
702	calendar year. However, a limited apportionment company shall
703	collect from its policyholders any emergency assessment imposed
704	under sub-subparagraph (b)3.d. The plan shall provide that, if
705	the office determines that any regular assessment will result in
706	an impairment of the surplus of a limited apportionment company,
707	the office may direct that all or part of such assessment be
708	deferred as provided in subparagraph (g)4. However, there shall
709	be no limitation or deferment of an emergency assessment to be
710	collected from policyholders under sub-subparagraph (b)3.d.
711	15.  Must provide that the corporation appoint as its
712	licensed agents only those agents who also hold an appointment
713	as defined in s. 626.015(3) with an insurer who at the time of
714	the agent's initial appointment by the corporation is authorized
715	to write and is actually writing personal lines residential
716	property coverage, commercial residential property coverage, or
717	commercial nonresidential property coverage within the state.
718	16.  Must provide a plan for removing personal lines
719	policies from coverage by the corporation which includes the
720	development and implementation of a take-out bonus strategy
721	determining, at a minimum, the necessity and application of
722	financial and regulatory incentives.
723	(d)1.  It is the intent of the Legislature that the rates
724	for coverage provided by the corporation be actuarially sound
725	and not competitive with approved rates charged in the admitted
726	voluntary market, so that the corporation functions as a
727	residual market mechanism to provide insurance only when the
728	insurance cannot be procured in the voluntary market. Rates
729	shall include an appropriate catastrophe loading factor that
730	reflects the actual catastrophic exposure of the corporation.
731	2.  For each county, the average rates of the corporation
732	for each line of business for personal lines residential
733	policies excluding rates for wind-only policies shall be no
734	lower than the average rates charged by the insurer that had the
735	highest average rate in that county among the 20 insurers with
736	the greatest total direct written premium in the state for that
737	line of business in the preceding year, except that with respect
738	to mobile home coverages, the average rates of the corporation
739	shall be no lower than the average rates charged by the insurer
740	that had the highest average rate in that county among the 5
741	insurers with the greatest total written premium for mobile home
742	owner's policies in the state in the preceding year.
743	3.  Rates for personal lines residential wind-only policies
744	must be actuarially sound and not competitive with approved
745	rates charged by authorized insurers. However, for personal
746	lines residential wind-only policies issued or renewed between
747	July 1, 2002, and June 30, 2003, the maximum premium increase
748	must be no greater than 10 percent of the Florida Windstorm
749	Underwriting Association premium for that policy in effect on
750	June 30, 2002, as adjusted for coverage changes and seasonal
751	occupancy surcharges. For personal lines residential wind-only
752	policies issued or renewed between July 1, 2003, and June 30,
753	2004, the corporation shall use its existing filed and approved
754	wind-only rating and classification plans, provided, however,
755	that the maximum premium increase must be no greater than 20
756	percent of the premium for that policy in effect on June 30,
757	2003, as adjusted for coverage changes and seasonal occupancy
758	surcharges. Corporation rate manuals shall include a rate
759	surcharge for seasonal occupancy. To ensure that personal lines
760	residential wind-only rates effective on or after July 1, 2004,
761	are not competitive with approved rates charged by authorized
762	insurers, the corporation, in conjunction with the office, shall
763	develop a wind-only ratemaking methodology, which methodology
764	shall be contained in each a rate filing made by the corporation
765	with the office by January 1, 2004. If the office thereafter
766	determines that the wind-only rates or rating factors filed by
767	the corporation fail to comply with the wind-only ratemaking
768	methodology provided for in this subsection, it shall so notify
769	the corporation and require the corporation to amend its rates
770	or rating factors to come into compliance within 90 days of
771	notice from the office. The office shall report to the Speaker
772	of the House of Representatives and the President of the Senate
773	on the provisions of the wind-only ratemaking methodology by
774	January 31, 2004.
775	4.  The provisions of subparagraph 2. do not apply to
776	coverage provided by the corporation in any county for which the
777	office determines that a reasonable degree of competition does
778	not exist for personal lines residential policies. The
779	provisions of subparagraph 3. do not apply to coverage provided
780	by the corporation in any county for which the office determines
781	that a reasonable degree of competition does not exist for
782	personal lines residential policies in the area of that county
783	which is eligible for wind-only coverage. In such counties, the
784	rates for personal lines residential coverage shall be
785	actuarially sound and not excessive, inadequate, or unfairly
786	discriminatory and are subject to the other provisions of the
787	paragraph and s. 627.062. The commission shall adopt rules
788	establishing the criteria for determining whether a reasonable
789	degree of competition exists for personal lines residential
790	policies. Beginning October 1, 2005, and each 6 months
791	thereafter, the office shall determine and identify those
792	counties for which a reasonable degree of competition does not
793	exist for purposes of subparagraphs 2. and 3., respectively.
794	5.4.  Rates for commercial lines coverage shall not be
795	subject to the requirements of subparagraph 2., but shall be
796	subject to all other requirements of this paragraph and s.
797	627.062.
798	6.5.  Nothing in this paragraph shall require or allow the
799	corporation to adopt a rate that is inadequate under s. 627.062.
800	7.6.  The corporation shall certify to the office at least
801	twice annually that its personal lines rates comply with the
802	requirements of this paragraph subparagraphs 1. and 2. If any
803	adjustment in the rates or rating factors of the corporation is
804	necessary to ensure such compliance, the corporation shall make
805	and implement such adjustments and file its revised rates and
806	rating factors with the office. If the office thereafter
807	determines that the revised rates and rating factors fail to
808	comply with the provisions of this paragraph subparagraphs 1.
809	and 2., it shall notify the corporation and require the
810	corporation to amend its rates or rating factors in conjunction
811	with its next rate filing. The office must notify the
812	corporation by electronic means of any rate filing it approves
813	for any insurer among the insurers referred to in subparagraph
814	2.
815	8.7.  In addition to the rates otherwise determined
816	pursuant to this paragraph, the corporation shall impose and
817	collect an amount equal to the premium tax provided for in s.
818	624.509 to augment the financial resources of the corporation.
819	9.8.a.  To assist the corporation in developing additional
820	ratemaking methods to assure compliance with this paragraph
821	subparagraphs 1. and 4., the corporation shall appoint a rate
822	methodology panel consisting of one person recommended by the
823	Florida Association of Insurance Agents, one person recommended
824	by the Professional Insurance Agents of Florida, one person
825	recommended by the Florida Association of Insurance and
826	Financial Advisors, one person recommended by the insurer with
827	the highest voluntary market share of residential property
828	insurance business in the state, one person recommended by the
829	insurer with the second-highest voluntary market share of
830	residential property insurance business in the state, one person
831	recommended by an insurer writing commercial residential
832	property insurance in this state, one person recommended by the
833	Office of Insurance Regulation, and one board member designated
834	by the board chairman, who shall serve as chairman of the panel.
835	b.  By January 1, 2004, the rate methodology panel shall
836	provide a report to the corporation of its findings and
837	recommendations for the use of additional ratemaking methods and
838	procedures, including the use of a rate equalization surcharge
839	in an amount sufficient to assure that the total cost of
840	coverage for policyholders or applicants to the corporation is
841	sufficient to comply with subparagraph 1.
842	c.  Within 30 days after such report, the corporation shall
843	present to the President of the Senate, the Speaker of the House
844	of Representatives, the minority party leaders of each house of
845	the Legislature, and the chairs of the standing committees of
846	each house of the Legislature having jurisdiction of insurance
847	issues, a plan for implementing the additional ratemaking
848	methods and an outline of any legislation needed to facilitate
849	use of the new methods.
850	d.  The plan must include a provision that producer
851	commissions paid by the corporation shall not be calculated in
852	such a manner as to include any rate equalization surcharge.
853	However, without regard to the plan to be developed or its
854	implementation, producer commissions paid by the corporation for
855	each account, other than the quota share primary program, shall
856	remain fixed as to percentage, effective rate, calculation, and
857	payment method until January 1, 2004.
858	10.9.  By January 1, 2004, The corporation shall develop a
859	notice to policyholders or applicants that the rates of Citizens
860	Property Insurance Corporation are intended to be higher than
861	the rates of any admitted carrier except when the provisions of
862	subparagraph 4. apply and providing other information the
863	corporation deems necessary to assist consumers in finding other
864	voluntary admitted insurers willing to insure their property.
865	(q)  The corporation shall not require the securing of
866	flood insurance as a condition of coverage if the property risk
867	of the insured or applicant is located in a Special Flood Hazard
868	Area as defined by the Federal Emergency Management Agency for
869	the National Flood Insurance Program. executes a form approved
870	by the office affirming that Flood insurance is not provided by
871	the corporation and that if flood insurance is not secured by
872	the applicant or insured in addition to coverage by the
873	corporation, the risk will not be covered for flood damage. A
874	corporation policyholder that does electing not to secure flood
875	insurance and makes a claim executing a form as provided herein
876	making a claim for water damage against the corporation shall
877	have the burden of proving the damage was not caused by
878	flooding. Notwithstanding other provisions of this subsection,
879	the corporation may deny coverage or refuse to issue or renew a
880	policy to an applicant or insured who refuses to purchase flood
881	insurance as required by this subsection to execute the form
882	described herein.
883	Section 7.  Subsection (1) of section 627.411, Florida
884	Statutes, is amended to read:
885	627.411  Grounds for disapproval.--
886	(1)  The office shall disapprove any form filed under s.
887	627.410, or withdraw any previous approval thereof, only if the
888	form:
889	(a)  Is in any respect in violation of, or does not comply
890	with, this code.
891	(b)  Contains or incorporates by reference, where such
892	incorporation is otherwise permissible, any inconsistent,
893	ambiguous, or misleading clauses, or exceptions and conditions
894	which deceptively affect the risk purported to be assumed in the
895	general coverage of the contract.
896	(c)  Has any title, heading, or other indication of its
897	provisions which is misleading.
898	(d)  Is printed or otherwise reproduced in such manner as
899	to render any material provision of the form substantially
900	illegible.
901	(e)  Is for property insurance and contains provisions that
902	are unfair or inequitable or contrary to the public policy of
903	this state or that encourage misrepresentation.
904	(f)(e)  Is for health insurance, and:
905	1.  Provides benefits that are unreasonable in relation to
906	the premium charged.;
907	2.  Contains provisions that are unfair or inequitable or
908	contrary to the public policy of this state or that encourage
909	misrepresentation.;
910	3.  Contains provisions that apply rating practices that
911	result in unfair discrimination pursuant to s. 626.9541(1)(g)2.
912	(g)(f)  Excludes coverage for human immunodeficiency virus
913	infection or acquired immune deficiency syndrome or contains
914	limitations in the benefits payable, or in the terms or
915	conditions of such contract, for human immunodeficiency virus
916	infection or acquired immune deficiency syndrome which are
917	different than those which apply to any other sickness or
918	medical condition.
919	Section 8.  Subsections (1) and (7) of section 627.7015,
920	Florida Statutes, are amended to read:
921	627.7015  Alternative procedure for resolution of disputed
922	property insurance claims.--
923	(1)  PURPOSE AND SCOPE.--This section sets forth a
924	nonadversarial alternative dispute resolution procedure for a
925	mediated claim resolution conference prompted by the need for
926	effective, fair, and timely handling of property insurance
927	claims. There is a particular need for an informal,
928	nonthreatening forum for helping parties who elect this
929	procedure to resolve their claims disputes because most
930	homeowner's and commercial residential insurance policies
931	obligate insureds to participate in a potentially expensive and
932	time-consuming adversarial appraisal process prior to
933	litigation. The procedure set forth in this section is designed
934	to bring the parties together for a mediated claims settlement
935	conference without any of the trappings or drawbacks of an
936	adversarial process. Before resorting to these procedures,
937	insureds and insurers are encouraged to resolve claims as
938	quickly and fairly as possible. This section is available with
939	respect to claims under personal lines and commercial
940	residential policies for all claimants and insurers prior to
941	commencing the appraisal process, or commencing litigation. If
942	requested by the insured, participation by legal counsel shall
943	be permitted. Mediation under this section is also available to
944	litigants referred to the department by a county court or
945	circuit court. This section does not apply to commercial
946	coverages, to private passenger motor vehicle insurance
947	coverages, or to disputes relating to liability coverages in
948	policies of property insurance.
949	(7)  If the insurer fails to comply with subsection (2) by
950	failing to notify a first-party claimant of its right to
951	participate in the mediation program under this section or if
952	the insurer requests the mediation, and the mediation results
953	are rejected by either party, the insured shall not be required
954	to submit to or participate in any contractual loss appraisal
955	process of the property loss damage as a precondition to legal
956	action for breach of contract against the insurer for its
957	failure to pay the policyholder's claims covered by the policy.
958	Section 9.  Effective upon this act becoming a law,
959	subsection (1) of section 627.702, Florida Statutes, is amended
960	to read:
961	627.702  Valued policy law.--
962	(1)(a)  In the event of the total loss of any building,
963	structure, mobile home as defined in s. 320.01(2), or
964	manufactured building as defined in s. 553.36(12), located in
965	this state and insured by any insurer as to a covered peril, in
966	the absence of any change increasing the risk without the
967	insurer's consent and in the absence of fraudulent or criminal
968	fault on the part of the insured or one acting in her or his
969	behalf, the insurer's liability, if any, under the policy for
970	such total loss, if caused by a covered peril, shall be in the
971	amount of money for which such property was so insured as
972	specified in the policy and for which a premium has been charged
973	and paid.
974	(b)  The intent of this subsection is not to deprive an
975	insurer of any proper defense under the policy, to create new or
976	additional coverage under the policy, or to require an insurer
977	to pay for a loss caused by a peril other than the covered
978	peril. In furtherance of such legislative intent, when a loss
979	was caused in part by a covered peril and in part by a
980	noncovered peril, paragraph (a) does not apply. In such
981	circumstances, the insurer's liability under this section shall
982	be limited to the amount of the loss caused by the covered
983	peril.
984	Section 10.  Section 627.706, Florida Statutes, is amended
985	to read:
986	627.706  Sinkhole insurance; definitions.--
987	(1)  Every insurer authorized to transact property
988	insurance in this state shall make available coverage for
989	insurable sinkhole losses on any structure, including contents
990	of personal property contained therein, to the extent provided
991	in the form to which the sinkhole coverage attaches.
992	(2)  As used in ss. 627.706-627.7074, and as used in
993	connection with any policy providing coverage for sinkhole
994	losses:
995	(a)  "Sinkhole" means a landform created by subsidence of
996	soil, sediment, or rock as underlying strata are dissolved by
997	ground water. A sinkhole may form by collapse into subterranean
998	voids created by dissolution of limestone or dolostone or by
999	subsidence as these strata are dissolved.
1000	(b)  "Sinkhole loss" means structural damage to a the
1001	building caused by sinkhole activity. Contents coverage shall
1002	apply only if there is structural damage to the building caused
1003	by sinkhole activity.
1004	(c)(3)  "Sinkhole activity loss" means actual physical
1005	damage to the property covered arising out of or caused by
1006	sudden settlement or systematic weakening collapse of the earth
1007	supporting such property only when such settlement or systematic
1008	weakening collapse results from movement or raveling of soils,
1009	sediments, or rock materials into subterranean voids created by
1010	the effect action of water on a limestone or similar rock
1011	formation.
1012	(d)  "Engineer" means a person, as defined in s. 471.005,
1013	who has a bachelor's degree or higher in engineering with a
1014	specialty in the geotechnical engineering field. An engineer
1015	must have geotechnical experience and expertise in the
1016	identification of sinkhole activity as well as other potential
1017	causes of damage to the structure.
1018	(e)  "Professional geologist" means a person, as defined by
1019	s. 492.102, who has a bachelor's degree or higher in geology or
1020	a related earth science with expertise in the geology of this
1021	state. A professional geologist must have geological experience
1022	and expertise in the identification of sinkhole activity as well
1023	as other potential causes of damage to the structure.
1024	(3)(4)  Every insurer authorized to transact property
1025	insurance in this state shall make a proper filing with the
1026	office for the purpose of extending the appropriate forms of
1027	property insurance to include coverage for insurable sinkhole
1028	losses.
1029	Section 11.  Section 627.7065, Florida Statutes, is created
1030	to read:
1031	627.7065  Database of information relating to sinkholes;
1032	the Department of Financial Services and the Department of
1033	Environmental Protection.--
1034	(1)  The Legislature finds that there has been a dramatic
1035	increase in the number of sinkholes and insurance claims for
1036	sinkhole damage in the state during the past 10 years.
1037	Accordingly, the Legislature recognizes the need to track
1038	current and past sinkhole activity and to make the information
1039	available for prevention and remediation activities. The
1040	Legislature further finds that the Florida Geological Survey of
1041	the Department of Environmental Protection has created a partial
1042	database of some sinkholes identified in Florida, although the
1043	database is not reflective of all sinkholes or insurance claims
1044	for sinkhole damage. The Legislature determines that creating a
1045	complete electronic database of sinkhole activity serves an
1046	important purpose in protecting the public and in studying
1047	property claims activities in the insurance industry.
1048	(2)  The Department of Financial Services, including the
1049	employee of the Division of Consumer Services designated as the
1050	primary contact for consumers on issues relating to sinkholes,
1051	and the Office of the Insurance Consumer Advocate shall consult
1052	with the Florida Geological Survey and the Department of
1053	Environmental Protection to implement a statewide automated
1054	database of sinkholes and related activity identified in the
1055	state.
1056	(3)  Representatives of the Department of Financial
1057	Services, with the agreement of the Department of Environmental
1058	Protection, shall determine the form and content of the
1059	database. The content may include standards for reporting and
1060	investigating sinkholes for inclusion in the database and
1061	requirements for insurers to report to the departments the
1062	receipt of claims involving sinkhole loss and other similar
1063	activities. The Department of Financial Services may require
1064	insurers to report present and past data of sinkhole claims. The
1065	database also may include information of damage due to ground
1066	settling and other subsidence activity.
1067	(4)  The Department of Financial Services may manage the
1068	database or may contract for its management and maintenance. The
1069	Department of Environmental Protection shall investigate reports
1070	of sinkhole activity and include its findings and investigations
1071	in the database.
1072	(5)  The Department of Environmental Protection, in
1073	consultation with the Department of Financial Services, shall
1074	present a report of activities relating to the sinkhole
1075	database, including recommendations regarding the database and
1076	similar matters, to the Governor, the Speaker of the House of
1077	Representatives, the President of the Senate, and the Chief
1078	Financial Officer by December 31, 2005. The report may consider
1079	the need for the Legislature to create an entity to study the
1080	increase in sinkhole activity in the state and other similar
1081	issues relating to sinkhole damage, including recommendations
1082	and costs for staffing the entity. The report may include other
1083	information, as appropriate.
1084	(6)  The Department of Financial Services, in consultation
1085	with the Department of Environmental Protection, may adopt rules
1086	to implement the provisions of this section.
1087	Section 12.  Section 627.707, Florida Statutes, is amended
1088	to read:
1089	627.707  Minimum Standards for investigation of sinkhole
1090	claims by insurers; nonrenewals.--
1091	(1)  Upon receipt of a claim for a sinkhole loss, an
1092	insurer must meet the following minimum standards in
1093	investigating a claim:
1094	(1)(a)  Upon receipt of a claim for a sinkhole loss, The
1095	insurer must make an inspection of the insured's premises to
1096	determine if there has been physical damage to the structure
1097	which may might be the result of sinkhole activity.
1098	(b)  If, upon the investigation pursuant to paragraph (a),
1099	the insurer discovers damage to a structure which is consistent
1100	with sinkhole activity or if the structure is located in close
1101	proximity to a structure in which sinkhole damage has been
1102	verified, then prior to denying a claim, the insurer must obtain
1103	a written certification from an individual qualified to
1104	determine the existence of sinkhole activity, stating that the
1105	cause of the claim is not sinkhole activity, and that the
1106	analysis conducted was of sufficient scope to eliminate sinkhole
1107	activity as the cause of damage within a reasonable professional
1108	probability. The written certification must also specify the
1109	professional discipline and professional licensure or
1110	registration under which the analysis was conducted.
1111	(2)  Following the insurer's initial inspection, the
1112	insurer shall engage an engineer and a professional geologist to
1113	conduct testing as provided in s. 627.7072 to determine the
1114	cause of the loss within a reasonable professional probability
1115	and issue a report as provided in s. 627.7073, if:
1116	(a)  The insurer is unable to identify a valid cause of the
1117	damage or discovers damage to the structure which is consistent
1118	with sinkhole loss; or
1119	(b)  The policyholder demands testing in accordance with
1120	this section or s. 627.7072.
1121	(3)  Following the initial inspection of the insured
1122	premises, the insurer shall provide written notice to the
1123	policyholder disclosing the following information:
1124	(a)  What the insurer has determined to be the cause of
1125	damage, if the insurer has made such a determination.
1126	(b)  A statement of the circumstances under which the
1127	insurer is required to engage an engineer and a professional
1128	geologist to verify or eliminate sinkhole loss and to make
1129	recommendations regarding land and building stabilization and
1130	foundation repair.
1131	(c)  A statement regarding the right of the policyholder to
1132	request testing by an engineer and a professional geologist and
1133	the circumstances under which the policyholder may demand
1134	certain testing.
1135	(4)  If the insurer determines that there is no sinkhole
1136	loss, the insurer may deny the claim. If the insurer denies the
1137	claim, without performing testing under s. 627.7072, the
1138	policyholder may demand testing by the insured under s.
1139	627.7072. The policyholder's demand for testing must be
1140	communicated to the insurer in writing after the policyholder's
1141	receipt of the insurer's denial of the claim.
1142	(5)(a)  Subject to paragraph (b), if a sinkhole loss is
1143	verified, the insurer shall pay to stabilize the land and
1144	building and repair the foundation in accordance with the
1145	recommendations of the engineer and the professional geologist
1146	as provided under s. 627.7073, and in consultation with the
1147	policyholder, subject to the coverage and terms of the policy.
1148	The insurer shall pay for other repairs to the structure and
1149	contents in accordance with the terms of the policy.
1150	(b)  The insurer may limit its payment to the actual cash
1151	value of the sinkhole loss until such time as expenses related
1152	to land and building stabilization and foundation repairs are
1153	incurred.
1154	(6)  Except as provided in subsection (7), the fees and
1155	costs of the engineer or the professional geologist shall be
1156	paid by the insurer.
1157	(7)(c)  If the insurer obtains, pursuant to s. 627.7073
1158	paragraph (b), written certification that there is no sinkhole
1159	loss or that the cause of the damage claim was not sinkhole
1160	activity, and if the policyholder has submitted the sinkhole
1161	claim without good faith grounds for submitting such claim, the
1162	policyholder shall reimburse the insurer for 50 percent of the
1163	actual costs cost of the analyses and services provided analysis
1164	under ss. 627.7072 and 627.7073 paragraph (b); however, a
1165	policyholder is not required to reimburse an insurer more than
1166	$2,500 with respect to any claim. A policyholder is required to
1167	pay reimbursement under this subsection paragraph only if the
1168	insurer, prior to ordering the analysis under s. 627.7072
1169	paragraph (b), informs the policyholder in writing of the
1170	policyholder's potential liability for reimbursement and gives
1171	the policyholder the opportunity to withdraw the claim.
1172	(8)(2)  No insurer shall nonrenew any policy of property
1173	insurance on the basis of filing of claims for partial loss
1174	caused by sinkhole damage or clay shrinkage as long as the total
1175	of such payments does not exceed the current policy limits of
1176	coverage for property damage, and provided the insured has
1177	repaired the structure in accordance with the engineering
1178	recommendations upon which any payment or policy proceeds were
1179	based.
1180	(9)  The insurer may engage a structural engineer to make
1181	recommendations as to the repair of the structure.
1182	Section 13.  Section 627.7072, Florida Statutes, is created
1183	to read:
1184	627.7072  Testing standards for sinkholes.--
1185	(1)  The engineer and professional geologist shall perform
1186	such tests as sufficient, in their professional opinion, to
1187	determine the presence or absence of sinkhole loss or other
1188	cause of damage within reasonable professional probability and
1189	to make recommendations regarding necessary building
1190	stabilization and foundation repair.
1191	(2)  Testing shall be conducted in compliance with the
1192	Florida Geological Survey Special Publication No. 57 (2005).
1193	Section 14.  Section 627.7073, Florida Statutes, is created
1194	to read:
1195	627.7073  Sinkhole reports.--
1196	(1)  Upon completion of testing as provided in s. 627.7072,
1197	the engineer and professional geologist shall issue a report and
1198	certification to the insurer and the policyholder as provided in
1199	this section.
1200	(a)  Sinkhole loss is verified if, based upon tests
1201	performed in accordance with s. 627.7072, an engineer and a
1202	professional geologist issue a written report and certification
1203	stating:
1204	1.  That the cause of the actual physical and structural
1205	damage is sinkhole activity within a reasonable professional
1206	probability.
1207	2.  That the analyses conducted were of sufficient scope to
1208	identify sinkhole activity as the cause of damage within a
1209	reasonable professional probability.
1210	3.  A description of the tests performed.
1211	4.  A recommendation of methods for stabilizing the land
1212	and building and for making repairs to the foundation.
1213	(b)  If sinkhole activity is eliminated as the cause of
1214	damage to the structure, the engineer and professional geologist
1215	shall issue a written report and certification to the
1216	policyholder and the insurer stating:
1217	1.  That the cause of the damage is not sinkhole activity
1218	within a reasonable professional probability.
1219	2.  That the analyses and tests conducted were of
1220	sufficient scope to eliminate sinkhole activity as the cause of
1221	damage within a reasonable professional probability.
1222	3.  A statement of the cause of the damage within a
1223	reasonable professional probability.
1224	4.  A description of the tests performed.
1225	(c)  The respective findings, opinions, and recommendations
1226	of the engineer and professional geologist as to the
1227	verification of a sinkhole loss, land and building
1228	stabilization, foundation repair, and elimination of sinkhole
1229	loss shall be presumed correct.
1230	(2)  Any insurer that has paid a claim for a sinkhole loss
1231	shall file a copy of the report and certification, prepared
1232	pursuant to subsection (1), with the county property appraiser
1233	who shall record the report and certification with the parcel
1234	number. The insurer shall bear the cost of filing and recording
1235	the report and certification. There shall be no cause of action
1236	or liability against an insurer for compliance with this
1237	section. The seller of real property upon which a sinkhole claim
1238	has been made shall disclose to the buyer of such property that
1239	a claim has been paid and whether or not the full amount of the
1240	proceeds were used to repair the sinkhole damage.
1241	Section 15.  The Auditor General shall perform an
1242	operational audit, as defined in s. 11.45(1), Florida Statutes,
1243	of the Citizens Property Insurance Corporation created under s.
1244	627.351(6), Florida Statutes. The scope of the audit shall also
1245	include:
1246	(1)  An analysis of the corporation's infrastructure,
1247	customer service, claims handling, accessibility of policyholder
1248	information to the agent of record, take-out programs, take-out
1249	bonuses, and financing arrangements.
1250	(2)  An evaluation of costs associated with the
1251	administration and servicing of the policies issued by the
1252	corporation to determine alternatives by which costs can be
1253	reduced, customer service improved, and claims handling
1254	improved.
1255
1256	The audit shall contain policy alternatives for the Legislature
1257	to consider. The Auditor General shall submit a report to the
1258	Governor, the President of the Senate, and the Speaker of the
1259	House of Representatives no later than February 1, 2006.
1260	Section 16.  The board of governors of the Citizens
1261	Property Insurance Corporation created under section 627.351(6),
1262	Florida Statutes, shall, by February 1, 2006, submit a report to
1263	the President of the Senate, the Speaker of the House of
1264	Representatives, the minority party leaders of the Senate and
1265	the House of Representatives, and the chairs of the standing
1266	committees of the Senate and the House of Representatives having
1267	jurisdiction over matters relating to property and casualty
1268	insurance. The report shall include the board's findings and
1269	recommendations on the following issues:
1270	(1)  The number of policies and the aggregate premium of
1271	the Citizens Property Insurance Corporation, before and after
1272	enactment of this act, and projections for future policy and
1273	premium growth.
1274	(2)  Increases or decreases in availability of residential
1275	property coverage in the voluntary market and the effectiveness
1276	of this act in improving the availability of residential
1277	property coverage in the voluntary market in the state.
1278	(3)  The board's efforts to depopulate the corporation and
1279	the willingness of insurers in the voluntary market to avail
1280	themselves of depopulation incentives.
1281	(4)  Further actions that could be taken by the Legislature
1282	to improve availability of residential property coverage in the
1283	voluntary and residual markets.
1284	(5)  Actions that the board has taken to restructure the
1285	corporation and recommendations for legislative action to
1286	restructure the corporation, including, but not limited to,
1287	actions relating to claims handling and customer service.
1288	(6)  Projected surpluses or deficits and possible means of
1289	providing funding to ensure the continued solvency of the
1290	corporation.
1291	(7)  The corporation's efforts to procure catastrophe
1292	reinsurance to cover its projected 100-year probable maximum
1293	loss with specification as to what best efforts were made by the
1294	corporation to procure such reinsurance.
1295	(8)  Such other issues as the board determines are worthy
1296	of the Legislature's consideration.
1297	Section 17.  Sections 3 and 4 of this act shall take effect
1298	on the same date that House Bill 1939 or similar legislation
1299	takes effect, if such legislation is adopted in the same
1300	legislative session or an extension thereof and becomes a law.
1301	Section 18.  Except as otherwise provided herein, this act
1302	shall take effect July 1, 2005.

CODING: Words stricken are deletions; words underlined are additions.